Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

ZIMBABWE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of February 28, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: February 5, 1995.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the 2005 Article IV consultation with Zimbabwe states that as of August 1, 2005, Zimbabwe maintained restrictions on the making of transfers and payments for current international transactions, and multiple currency practices, inconsistent, respectively, with Article VIII Sections 2(a) and 3 of the Fund’s Articles of Agreement. Zimbabwe maintains multiple currency practices (MCP) arising from the lack of a mechanism to prevent a divergence of more than 2 percent between (i) the exchange rates in the official and parallel markets, (ii) the exchange rates applicable for private sector imports and government imports, (iii) the exchange rates paid by successful bidders in the same tender, (iv) the exchange rate used for surrender of export receipts, including from international gold sales (weighted average rate from each auction) and the other rates in the exchange market, and (v) the exchange rate applicable to inward remittances of foreign exchange. Zimbabwe also maintains exchange restrictions arising from (i) limitations on the availability of foreign exchange, in the form of priority lists that limit the provision of foreign exchange for certain specified transactions which are subject to the approval of the Reserve Bank of Zimbabwe (RBZ), and (ii) the existence of private sector external payment arrears inconsistent with Article VIII Section 2(a). (Country Report No. 05/360)
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Zimbabwe is the Zimbabwe dollar. Effective August 1, 2006, the Zimbabwe dollar was redenominated using a rate of 1:1,000.
Exchange rate structureMultiple.
Classification
Conventional pegged arrangementEffective January 24, 2006, the Reserve Bank of Zimbabwe (RBZ) introduced the Tradable Foreign Currency Balance System (TFCBS), under which the interbank exchange rate is allowed to depreciate by a daily maximum of (1) 1% if the volume transacted in the market reaches US$5–US$10 million a day; (2) 1.5% if daily transaction volume reaches US$10–US$15 million a day; and (3) 2% if it exceeds US$15 million a day. Under this system, volume is known only to the RBZ, and the RBZ effectively fixes the exchange rate. Because the exchange rate has remained effectively constant since the system was introduced, the exchange rate regime was reclassified effective January 25, 2006, to the category conventional pegged arrangement from the category managed floating with no predetermined path for the exchange rate. Also effective that date, all foreign exchange transactions by the government were effected at the rate of Z$30,000 per US$1. Previously, foreign exchange transactions of the government and public enterprises were effected at the rate of Z$26,000 per US$1. All other transactions and inward remittances were subject to the interbank exchange rate. Transactions under these two rates were effected through a carrot-and-stick retention-based export incentive scheme operated by the RBZ. On August 1, 2006, the RBZ redenominated the Zimbabwe dollar at a rate of 1:1,000 and devalued it by 60% vis-à-vis the U.S. dollar. Previous banknotes and bearer checks were allowed to be used for three weeks after the redenomination.



Effective April 27, 2006, the guaranteed floor exchange rate for inward remittances was changed to the interbank rate. Previously, a floor exchange rate of Z$17,500 per US$1 applied for inward remittances. On August 1, 2006, the RBZ introduced the Exchange Rate



Impact Assessment Board (ERIAB) to monitor and inform the market of the sustainable bands of exchange rate adjustments under a “new flexible exchange rate regime.” However, the board is not operational yet.



The interbank rate has remained fixed so far at Z$250 per US$1 (the new currency).
Exchange taxNo.
Exchange subsidyAn official rate for government imports and debt service with Afreximbank applies at Z$30 per US$1 (after redenomination). Effective April 27, 2006, public enterprises receive foreign exchange from the RBZ at the prevailing interbank rate. For the 2007 selling season, the new producer price of cotton is Z$500 a kilogram. For the 2006 season, the producer prices of wheat and maize were Z$49,000 a ton and Z$2,000 a ton, respectively.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsAll payments by nonresidents to residents must be effected in any of the 17 currencies freely convertible through ADs, with the exception of payments otherwise specified or effected through nonresident accounts. Recipients of money transfers from the Diaspora have an option to receive payment in foreign currency. There is a maximum threshold of Z$500,000 for cash payments in local currency, above which payments must be effected through bank transfers.
Controls on the use of domestic currency
For current transactions and paymentsResidents may convert domestic currency only to meet approved current account payments.
For capital transactions
Transactions in capital and money market instrumentsRBZ approval is required for residents to convert domestic currency in order to make capital payments.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsResidents are not allowed to transact in foreign exchange.
Payments arrangements
Bilateral payments arrangements
OperativeThere are arrangements with Botswana, Libya, Malawi, Malaysia, Namibia, and South Africa.
Regional arrangementsZimbabwe is a member of the RIFF.
Clearing agreementsZimbabwe is a member of the COMESA clearinghouse.
Administration of controlExchange control is administered by the RBZ under powers delegated to it by the MOF through the Exchange Control Act, Exchange Control Statutory Instruments, and Exchange Control Directives.
Payments arrears
OfficialYes.
PrivateYes.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeNo person, either as principal or agent, may deal in or possess gold unless that person is (1) the holder of a license or permit, (2) the holder or distributor of a registered mining location from which gold is being produced, or (3) the employee or agent of any of the persons mentioned in (1) and (2) above and authorized by an employer or principal to deal in or possess gold that is already in the lawful possession of the employer or principal. A mining commissioner may issue to any person a permit authorizing the acquisition, possession, or disposal of any gold, provided the quantity does not exceed one troy ounce. In all other cases, permission may be issued by the Secretary for Mines only.



Under the terms of the Gold Trade Act, three types of licenses may be issued: a gold dealing license, a gold recovery works license, and a gold assaying license. All gold obtained from a registered mining location must be lodged with the holder of its gold dealing license no later than the tenth day of every month unless specific permission has been granted by the mining commissioner or the appropriate minister. Any person intending to smelt gold or any article containing gold must first obtain a license issued by a district commissioner under the terms of the Secondhand Goods Act, which authorizes the possession of smelting equipment. Small-scale gold producers receive a support price of Z$16,000 a gram. The gold support price for large-scale producers was abandoned but they can access the support price for small-scale producers if they choose to be paid in Zimbabwe dollars.
On external tradeThe exportation of gold in unmanufactured form is controlled and licensed by the Ministry of Mines; these controls do not apply to the RBZ. No export licenses for gold are issued.



The importation of gold is controlled by the Gold Trade Act, which requires those intending to import gold into Zimbabwe to meet certain requirements.
Controls on exports and imports of banknotes
On exports
Domestic currencyEffective February 1, 2007, the limit for the export of local currency in person or baggage by resident travelers is set at Z$100,000 (new currency). Previously, resident travelers could take out up to Z$5,000.
Foreign currencyResidents may take out up to the equivalent of US$1,000 a day without Exchange Control approval and may take out up to the equivalent of US$500 a day for business travel and up to US$2,500 a year for holiday travel. Nonresident travelers may take out the traveler’s checks they brought in, less the amount they sold to ADs. On departure, nonresident travelers may reconvert unspent Zimbabwean currency into foreign currencies on presentation of exchange certificates.
On imports
Domestic currencyYes.
Foreign currencyForeign currency and traveler’s checks may be imported without restriction but may be sold or exchanged through ADs only. A declaration of the source is required for amounts exceeding US$2,000.
References to legal instruments and hyperlinksExchange Control Act and the Exchange Control Statutory Instruments.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResident individuals may open foreign currency accounts (FCAs) in one of the denominated currencies in local branches of ADs. They may also open rand and pula accounts over and above the denominated currencies. Funds withdrawn from FCAs and converted into local currency may not be redeposited in the account, except for the amount of the initial investment and income or capital gains from investments in listed companies on the stock exchange or money market accounts. Effective October 1, 2006, 10% of export earnings are directed toward the Fuel and Electricity Stabilization Fund (FESF), effectively increasing the surrender requirement to 32.5%. Previously, exporters were allowed to retain 75% in FCAs for an indefinite time and 25% was sold to the RBZ at the interbank rate. Tobacco prices are quoted in U.S. dollars at auctions, but producers can retain 15% of the sales in FCAs and receive the rest in the local currency equivalent at the interbank rate. In addition, producers received a 65% top-up bonus for sales until August 31, 2006, on the Tobacco Performance Research and Development Facility (TPRDF). This bonus came on top of the 35% early delivery bonus introduced on April 27, 2006, which was based on the actual value of the tobacco sold on the auction floors. Gold producers are allowed to deposit the same percentage of gold proceeds in FCAs as exporters of other goods and they receive the international price at the interbank rate for the remainder.
Held abroadYes.
Approval requiredYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyA resident may convert funds in a domestic account into foreign currency only when effecting approved foreign currency transactions.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be credited with foreign currencies, with payments from other nonresident accounts, or with payments by residents that would be eligible for transfer outside Zimbabwe. Nonresident accounts may be debited for payments to residents, for payments to other nonresident accounts, or for payments abroad. Nonresident individuals may open FCAs in one of the denominated currencies in local branches of ADs. Funds in these accounts are traded at market-determined exchange rates. Funds withdrawn from these accounts and converted into local currency, however, may not be redeposited in the account, except in the case of the initial investment, and income or capital gains from investments in the stock exchange. The liquidation of FCAs takes place at the interbank exchange rate.
Approval requiredYes.
Domestic currency accountsYes.
Convertible into foreign currencyNonresidents may convert domestic currency accounts into foreign currency only when emigrating and taking out their surplus earnings.
Approval requiredYes.
Blocked accountsFormer residents residing outside Zimbabwe may maintain emigrants’ accounts in Zimbabwe. Cash assets held in Zimbabwe in the names of emigrants must be blocked in these accounts, and all payments to and from these accounts are subject to various exchange restrictions.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsAdvance payments for imports of up to US$100,000 are allowed. Payments exceeding this limit require prior approval from Exchange Control.
Documentation requirements for release of foreign exchange for importsADs may approve applications for payment for authorized imports, provided the necessary documentation is submitted to and approved by the RBZ. The documentation required includes pro forma invoices detailing the name of the importer, the type of goods being imported, the respective items, the value of goods, and period of delivery. Payments for imports may not be made in domestic currency through a local nonresident account.
Domiciliation requirementYes.
Letters of creditYes.
OtherImports of finished goods and raw materials for processing must be effected within 14 and 30 days after payment, respectively. Approval is required for longer periods.
Import licenses and other nontariff measures
Positive listThere is a priority list for foreign currency payments for which foreign exchange may be provided in the interbank market.
Negative listThe negative list for imports includes, in addition to items restricted for health or security reasons, weaponry, nonmonetary gold, pearls, precious and semiprecious stones, and some jewelry items.
Open general licensesYes.
Licenses with quotasNo quotas are in effect, but seasonal restrictions are applied to certain agricultural products.
Other nontariff measuresImports of certain goods (mostly agricultural and processed food products) require a special permit issued by the Ministry of Lands and Agriculture.
Import taxes and/or tariffsThe customs duty regime consists mainly of ad valorem duties, which range up to a maximum of 70% for luxuries, with a surtax of 10% on finished goods and specific duties on a number of products. Generally, imports are subject to an additional tax (between 12.5% and 20%) equivalent to the VAT imposed on goods sold domestically. Government imports and capital goods for statutory bodies are exempt from customs duties. Effective April 27, 2006, government imports are subject to the interbank rate. Previously, effective January 25, 2006, government imports were subject to an official rate of Z$30 per US$1. The maximum tariff rate is 100% and applies to 18 tariff items. Customs duty valuation is based on the interbank exchange rate.
State import monopolyMaize may be imported only by the Grain Marketing Board or by others with the permission of the board. Petroleum is imported by the National Oil Company, as well as by private companies under a license issued by the Ministry of Energy.
References to legal instruments and hyperlinksExchange Control Act.
Exports and Export Proceeds
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankEffective August 1, 2006, (1) exporters and gold producers are allowed to retain 75% in FCAs for an indefinite time and the remainder is sold to the RBZ at the interbank rate, effective October 11, 2006, if the surrender takes place within 90 days (previously, 30 days); and (2) tobacco farmers are given 15% FCA retention facility with no liquidation or expiration limits. Effective August 1, 2006, an additional 65% bonus scheme was introduced for tobacco exports for sales on the TPRDF. Previously, before January 25, 2006, exporters were allowed to retain proceeds in FCAs for 30 days, which was raised May 1, 2006, to 70 days; foreign exchange not used after this period must be sold at the interbank exchange rate (previously, at Z$17,500 per US$1). Effective April 27, 2006, beyond 90 days, without specific Exchange Control approval, exporters forfeit the right of retention, and all export proceeds are liquidated at the interbank rate. Effective August 1, 2006, corporate FCA holders (nonresident controlled companies, and EPZ companies that are wholly financed from abroad) may use retained foreign exchange earnings for an indefinite period (previously, effective January 25, 2006, for 30 days) for purposes specified on a priority list and other business related expenses. Effective October 1, 2006, an additional 10% of the receipts is directed toward the FESF, to which the RBZ also contributes 10% from its 25% compulsory surrender. This effectively increases the surrender requirement to 32.5%. A retention rate of 80% for incremental export proceeds applies from August 2005 to December 2006, to be reduced to 60% for 2007.
Surrender to authorized dealersEffective October 1, 2006, 10% of export earnings are directed toward the FESF, effectively increasing the surrender requirement to 32.5%.
Financing requirementsPayments for exports must be received in foreign currency transferred into Zimbabwe through the banking system, except when there are special arrangements. Goods may not be exported without permission, unless the customs authorities are satisfied that payment has been received in an approved manner or will be received within three months of the date of shipment (or a longer period if permitted by the RBZ).
Documentation requirements
Letters of creditYes.
DomiciliationYes.
Export licenses
Without quotasExport licenses are required for the following: (1) any ore, concentrate, or other manufactured product of chrome, copper, lithium, nickel, tin, or tungsten; (2) petroleum products; (3) jute and hessian bags; (4) road or rail tankers for carrying liquids or semiliquids; (5) bitumen, asphalt, and tar; (6) wild animals and wild animal products; (7) certain wood products; (8) ammonium nitrate; and (9) armaments. Export-licensing requirements are imposed for reasons of health and social welfare, as well as to ensure an adequate domestic supply of essential products. Export permits are required from the Ministry of Lands and Agriculture for some basic agricultural commodities, including maize, oil seeds, cheese, milk, seeds, potatoes, citrus fruits, apples, bananas, and tomatoes.
Export taxesNo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersForeign exchange to pay for invisibles related to imports and, within certain limits, for other purposes is provided by commercial banks under delegated authority; prior approval of the RBZ is required. Applications for foreign exchange exceeding the limits established for commercial banks are approved by the RBZ, which deals with each case on its merits.
Trade-related payments
Prior approvalRequired for payment of commissions.
Quantitative limitsThe limits for freight and insurance are 30% of the f.o.b. value of goods transported, but for goods that are of exceptional volume in relation to value, up to 80% of the f.o.b. value may be approved. For commissions, the following limits apply: (1) confirming commission—up to 2.5% of c.i.f. value; (2) buying commission—up to 5% of f.o.b. value; (3) foreign travel agents—up to 10% of sales; and (4) selling commission—up to 7.5% of f.o.b. value.
Indicative limits/bona fide testYes.
Investment-related payments
Prior approvalAll investment-related transfers are subject to prior RBZ approval. Certain applications are submitted to ADs for approval without reference to the RBZ.
Quantitative limitsA corporation may be authorized to remit by way of dividends to foreign shareholders, including dividends due to former residents of Zimbabwe, up to 100% of the corporation’s net after-tax profits, provided an application for the remittance of a dividend is submitted to an AD within 12 months from the end of the financial year in which the dividend is payable.
Indicative limits/bona fide testYes.
Payments for travel
Prior approvalYes.
Quantitative limitsThe basic foreign exchange allowance for nonbusiness travel is US$2,500 a person a year regardless of age, and that for business travel is US$500 a day. In practice, owing to the foreign exchange shortage, foreign exchange is not readily made available for nonbusiness travel.
Indicative limits/bona fide testYes.
Personal paymentsRemittance of pensions of former residents is guaranteed under the constitution.
Prior approvalWith RBZ approval, foreign exchange is provided for education abroad beyond the secondary school level for certain diploma and degree courses.
Quantitative limitsFor medical treatment, the limit is US$20,000 a trip for the patient and one companion. A travel allowance up to US$250 a person a day may be allowed. For studies abroad, the limit is US$50,000 a year, and the annual limit is the US$2,000 for alimony and child support payments.
Indicative limits/bona fide testApplications for additional amounts must be submitted to the RBZ for approval.
Foreign workers’ wages
Prior approvalExpatriate workers may remit their monthly salaries, subject to RBZ approval.
Quantitative limitsAmounts of up to one-third of gross salary may be remitted.
Indicative limits/bona fide testYes.
Credit card use abroad
Prior approvalYes.
Quantitative limitsCredit cards may be used abroad for holiday travel by FCA holders, up to US$2,500, and for business travel, up to the limits set for those transactions.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Quantitative limitsThe annual limit for subscriptions for a company is the equivalent of US$20,000.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankReceipts from invisibles must be repatriated through the banking system, and the surrender requirement governing export proceeds also applies to all invisible transactions. Foreign exchange receipts from tourists and by international organizations, embassies, and individuals are purchased by the RBZ at Z$250 per US$1. Effective August 1, 2006, exporters are allowed to retain 75% (previously, 70%) in FCAs for an indefinite time, and the remainder is sold to the RBZ at the interbank rate. Effective October 1, 2006, an additional 10% of the receipts must be paid to the FESF.
Surrender to authorized dealersEffective October 1, 2006, 10% of export earnings are directed toward the FESF, effectively increasing the surrender requirement to 32.5%.
Restrictions on use of fundsThe use of these funds is limited to a specified priority list.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsInward transfers of capital through normal banking channels are not restricted. Outward transfers of capital are controlled.
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankEffective May 1, 2006, foreign exchange from trade finance facilities and other capital inflows are required to be surrendered to the RBZ at the interbank rate.
Surrender to authorized dealersYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsForeign investors are permitted to participate in the Zimbabwe Stock Exchange (ZSE) using currency received in Zimbabwe through normal banking channels. The initial investment plus any capital gains and dividend income may be remitted without restriction. Foreign investors may also subscribe for up to 35% of primary issues of bonds and stocks. Nonresidents are not permitted to purchase bonds and stocks on the secondary market.
Sale or issue locally by nonresidentsNonresident investors are allowed to sell their bonds and stocks on the secondary market.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase locally by nonresidentsForeign investors may also subscribe for up to 35% of primary issues of bonds and stocks. Nonresidents are not permitted to purchase bonds and stocks on the secondary market. Former residents holding blocked assets and new emigrants are allowed to invest their funds in government external bonds with a maturity of 12 years and an annual interest rate of 4%.



For investments prior to May 1993, under current legislation, disinvestment proceeds on the original amount of the investment may be remitted, but any capital appreciation that arises from revaluation of the investment goes to “blocked funds,” which are then converted into six-year bonds at a 4% interest rate, and a variable ratio of remittances is allowed, depending on the discount offered. However, if the amount of capital appreciation is small, it may usually be repatriated without restriction.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Purchase locally by nonresidentsAll unremitted pension funds and any future pension remittances may be credited to an interest-earning block account. These funds may be invested in money market instruments and remitted freely. For investments made after May 1, 1993, proceeds from any disinvestment may be remitted without restriction.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securitiesControls apply to all these transactions.
Controls on derivatives and other instrumentsNo derivative transactions with foreign currency implications are permitted.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
To residents from nonresidentsAll foreign borrowing requires RBZ approval and prior approval of the External Loans Coordination Committee. Gold producers undertaking new expansion projects are permitted access to offshore financing in the form of gold loans.
Financial credits
By residents to nonresidentsResidents are not permitted to provide credit to nonresidents without RBZ approval.
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilitiesControls apply to all these transactions.
Controls on direct investment
Outward direct investmentThese investments require RBZ and MOF approval on a case-by-case basis.
Inward direct investmentDirect foreign investment in various sectors is subject to the prior approval of the Zimbabwe Investment Authority, normally with the following conditions: (1) up to 100% foreign ownership is allowed in the following priority sectors: manufacturing, mining, quarry and mineral exploration, and development of hotels for tourism; (2) up to 70% foreign shareholding is permitted in specialized services such as management consultancy and construction; and (3) a maximum of 35% foreign ownership (reserved sector list) is allowed in selected sectors, where foreign investors wishing to participate may do so only in joint-venture partnership with Zimbabwean firms or individuals. The reserved sector list is as follows: primary production of food and cash crops; primary horticulture; game, wildlife ranching, and livestock; forestry; fishing and fish farming; poultry farming; employment agencies; estate agencies; valet services; armaments manufacture, marketing, and distribution; public water provision for domestic and industrial purposes; rail operations; grain mill products; bakery products; sugar products; tobacco packaging and grading; and tobacco products.
Controls on liquidation of direct investmentAll foreign investments, irrespective of their source, that have been undertaken through normal banking channels since May 1, 1993, may be repatriated. In all cases, specific applications must be submitted to the RBZ with respect to repatriation of capital. Repatriation at accelerated rates that depend on discounted sale prices of net equity is allowed for investments effected before 1979.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsYes.
Controls on personal capital transactions
LoansRBZ approval is required for all loans to or from nonresidents.
Gifts, endowments, inheritances, and legaciesControls apply to all these transactions.
Settlements of debts abroad by immigrantsYes.
Transfer of assets
Transfer abroad by emigrantsApplications for emigrant status must be submitted to the RBZ; the settling-in allowance emigrants may remit abroad is limited to the equivalent of US$1,000 a person or US$2,000 a family. In exceptional cases, the exchange control authorities will consider applications exceeding this maximum. All those applying for emigrant status are required to liquidate their assets within six months after emigrating and invest the total proceeds, less any settling-in allowance granted, in 4%, 12-year Zimbabwe government external bonds.
Transfer of gambling and prize earningsLottery prizes due to nonresidents may be transferred, provided the funds that were used in betting were originally transferred into Zimbabwe in foreign currency. The winning prize may not be remitted.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadBorrowing abroad is subject to exchange control rules and regulations and the approval of the External Loans Coordination Committee.
Maintenance of accounts abroadThe maintenance of accounts abroad is subject to exchange control rules and regulations.
Lending to nonresidents (financial or commercial credits)Lending to nonresidents is subject to exchange control rules and regulations, and is usually not permitted.
Lending locally in foreign exchangeThese transactions are subject to exchange control rules and regulations.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchangeThere are rules that allow for differential treatment of local exporters and companies operating in the EPZ.
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsControls apply to mortgage rates of building societies.
Investment regulations
Abroad by banksInvestment abroad by local banks in offshore entities is subject to exchange control approval.
In banks by nonresidentsAcquisition of equity by nonresidents in local banks listed on the ZSE is subject to the ZSE’s rules and regulations. Banks not listed on the ZSE are subject to exchange control approval.
Open foreign exchange position limitsADs are subject to overnight net foreign currency exposure limits. The net open position limit of foreign exchange dealers is the equivalent of US$2 million or 10% of their capital base, and their capital requirements are 5% (core/Tier 1) and 10% (total capital).
Provisions specific to institutional investorsLocal institutional investors are not permitted to invest in securities registered offshore. Purchase of shares by foreign investors is limited to 40% of the total equity of the company, with a limit of 10% for one investor. These limits are in addition to any existing foreign shareholdings in companies that existed prior to May 1, 1993.
Insurance companies
Limits (max.) on securities issued by nonresidentsYes.
Limits (max.) on investment portfolio held abroadYes.
Limits (min.) on investment portfolio held locallyYes.
Currency-matching regulations on assets/liabilities compositionYes.
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange arrangementJanuary 25. The exchange rate regime of Zimbabwe was reclassified to the category conventional pegged arrangement from the category managed floating with no predetermined path for the exchange rate.



January 25. All foreign exchange transactions by the government are effected at the rate of Z$30,000 per US$1 (previously, Z$26,000 per US$1).



January 25. The RBZ introduced the TFCBS, by which the interbank exchange rate was allowed to depreciate by a daily maximum of (1) 1% if the volume transacted in the market reached US$5–US$10 million a day; (2) 1.5% if daily transaction volume reached US$10–US$15 million; and (3) 2% if it exceeded US$15 million a day. Under this system, market volume is known only to the RBZ, and the RBZ effectively fixes the exchange rate.



April 27. The guaranteed floor exchange rate for inward remittances was changed to the interbank rate.



April 27. Public enterprises receive foreign exchange from the RBZ at the interbank market rate.



August 1. The RBZ redenominated the Zimbabwe dollar at a rate of 1:1,000 and devalued it by 60% vis-à-vis the U.S. dollar.



August 1. The ERIAB was introduced to monitor and inform the market of the sustainable bands of exchange rate adjustments under a new flexible exchange rate regime. However, this board is not operational yet and the rate remains fixed.
Resident accountsApril 27. Tobacco growers were awarded an early delivery bonus of 35% based on the actual value of the tobacco sold on the auction floors.



August 1. Tobacco growers received a 65% top-up bonus for sales on the TPRDF.



October 1. Ten percent of export earnings were directed toward the FESF, effectively increasing the surrender requirement to 32.5%.
Imports and import paymentsJanuary 25. Government imports became subject to an official rate of Z$30 per US$1 (previously, Z$25 per US$1).



April 27. Government imports became subject to the interbank rate.
Exports and export proceedsJanuary 25. Corporate FCA holders (nonresident controlled companies, and EPZ companies that were wholly financed from abroad) were permitted to use retained foreign exchange earnings for up to 30 days (previously, 21 days) for purposes specified on a priority list; foreign exchange not used after this period must be sold at the interbank exchange rate (previously, at Z$17,500 per US$1).



April 27. For export proceeds received after 90 days without specific Exchange Control approval, exporters forfeit the right of retention and all export proceeds are liquidated at the interbank rate.



May 1. Exporters were permitted to retain 70% of the export proceeds in FCAs, which should be utilized within 90 days. The remaining 30% was required to be sold at the interbank rate.



August 1. Exporters and gold producers were allowed to retain 75% of foreign exchange proceeds in FCAs for an indefinite time and use it for purposes specified on a priority list and other business related expenses; the remainder must be sold to the RBZ at the interbank rate.



August 1. An additional 65% bonus scheme was introduced for tobacco exports for sales on the TPRDF. August 1. Tobacco farmers were given 15% FCA retention facility with no liquidation or expiration limits.



October 1. Ten percent of export earnings were directed toward the FESF, effectively increasing the surrender requirement to 32.5%.



October 1. The time limit for surrendering 25% of foreign exchange proceeds of exporters and gold producers while retaining 75% of the proceeds in FCAs was increased to 90 days from 30 days.
Proceeds from invisible transactions and current transfersAugust 1. Exporters were allowed to retain 75% in FCAs for an indefinite time; the remainder must be sold to the RBZ at the interbank rate.



October 1. Ten percent of export earnings were directed toward the FESF, effectively increasing the surrender requirement to 32.5%.
Capital transactionsMay 1. Foreign exchange from trade finance facilities and other capital inflows are required to be surrendered to the RBZ at the interbank rate.
Changes during 2007
Arrangements for payments and receiptsFebruary 1. The limit for the export of local currency by resident travelers was increased to Z$100,000.

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